Speech to Ibec President’s Dinner

27th September, 2019

Good evening ladies and gentlemen, 

It is a pleasure to be here with you this evening to again mark IBEC’s President’s dinner.  

I would like to take the opportunity to congratulate the outgoing President, Paraic Curtis, on a fine year in office. 

Taking on the mantle going forward, I would also like to welcome the new President, Pat McCann. 

I look forward to the year-ahead and I am sure many interactions with IBEC. 

It is also a pleasure to visit the iconic RDS. 

From a music venue, to the Dublin Horse Show, to European rugby fixtures, to tonight, in hosting such an esteemed group of business leaders, it shows its versatility and that it remains a fantastic venue. 

Looking back on last year’s speech, which I am sure you all remember, I flagged three real and growing risks at the time. These were: 

  • First, Brexit – specifically the potential fallout from a more adverse-than-expected outcome of the discussions that were under way at the time; 
  • Second, global protectionism – and the risks for Ireland’s traded sector; 
  • Third, changes in other jurisdictions that could affect the competitiveness of our corporate tax regime. 

As Minister for Finance, developments in these areas have been at the forefront of my department’s work this year and needless to say, have become even more pressing in recent months. 

The international environment remains turbulent and challenging. 

Events like tonight give us the opportunity to exchange views on these issues whilst also looking forward with a view to the opportunities that will inevitably arise. 

My job involves mitigating such risks through careful management of the public finances while also helping to raise incomes and living standards through growth-friendly policies.  

In that respect, despite many challenges, the Irish economy continues to thrive:

  • Growth remains robust, well balanced and broad-based. 
  • Living standards are improving across a whole host of metrics – be it incomes, wages, consumer spending or numbers at work. 
  • Employment is at 2.3 million persons and growing – a new record for Ireland, with close to 1,000 new jobs per week being created. 
  • Looking at the audience of business leaders and employers in front of me, it is this metric – numbers at work on a day-to day basis which offers us the most tangible evidence of the transformation in this economy. 

As well as the labour market, our public finances are much improved and well placed to face the risks ahead: 

  • The headline budget balance returned to surplus for the first time in more than a decade last year, with a 5thconsecutive year of primary surplus; and 
  • The (effective) interest rate on our debt has improved significantly as have our credit ratings, with ‘A’ grade status across the main agencies. 

Aside from fiscal policy, credit conditions are also very different now thanks in no small part to the range of macro-prudential measures now in place. 

Of course, there are numerous risks that are beyond our control. 

While in a geographic sense, we may be viewed as being on Europe’s periphery, from an economic perspective we are very much at the core – not least as one of the founding members of the Euro but also through the sheer depth of our commitment to the Single Market, to free trade and to Foreign Direct Investment (FDI). 

In this context, I would like to take the opportunity this evening to touch on a number of areas that are foremost in my thinking in Budget 2020, specifically protecting our public finances, delivering continued government investment spending, while mitigating risks associated with corporation tax, and of course, Brexit.

Budget 2020 and the public finances

In framing this speech, I was struck by how much stronger and more resilient our economy is today than was the case a short number of years ago. 

We can see this very clearly in spending figures and specifically the return to sustainable rates of increase. 

By end-year, the average annual rate of increase in current spending since 2015 is likely to be 4 per cent. 

The equivalent figure in the period immediately preceding the last crisis was 12½ per cent. 

These figures speak for themselves. 

The economy is in a stronger position now than was the case prior to the last downturn. 

Growth is robust but well diversified unlike previously, when the construction sector was the main engine of growth. 

Similarly, credit is more balanced with broadly neutral growth since 2015, relative to growth of close to 20 per cent annually from 2005 to 2009. 

On the external side, the balance of payments is in surplus in contrast to the deficit that prevailed a decade ago. 

Returning to the fiscal side, the return to a budget surplus in 2018 was a key milestone coupled with a further improvement in the headline debt ratio. 

I would stress, however, that the fiscal rules in themselves are not a panacea. 

Indeed, in some respects they may not be entirely appropriate for an economy like Ireland’s. 

All the more reason then, for us to continue to take the sensible steps to building on the surplus we delivered last year by improving on it in the forthcoming Budget so that the public finances are in a strong position to respond to all Brexit scenarios – including no deal.

Government Investment

One specific aspect of the public finances that I would like to focus on is investment spending. 

IBEC has been to the fore in championing the need for higher levels of public capital investment through your communications and via contributions at the National Economic Dialogue. 

I share these views. 

Our plans for investment through the National Development Plan (NDP)Rebuilding Ireland and Future Jobs Irelandare in recognition of the need to raise investment levels. 

I see a clear need for more focus on the supply-side so that Ireland can continue to grow at robust rates over the next decade. 

That is why I have prioritised government investment. 

One of the key lessons for me from the past was that the level of (net) investment was allowed to drift downwards for too long, bottoming out at 0.3 per cent of GDP in 2012. 

This meant that we were just about maintaining the level of public capital. 

As business leaders, entrepreneurs and investors, I think you can all appreciate that this was simply not sustainable. 

We are greatly enhancing the level and quality of public capital through the National Development Plan and Project Ireland 2040, with €116 billion in investment planned – more than a third of our economy’s output – in long-term critical infrastructure – housing, transport, education and healthcare. 

Addressing the infrastructural constraints that developed during the crisis through investment in housing, transport and other key areas is essential to ensure the economy remains competitive and resistant to external shocks. 

Prioritising capital expenditure in this way is delivering the homes that our families need, the schools that our children need and the investment that climate change requires – both now and into the future. 

Capital spending next year will amount to around €8 billion – more than double the level of a few short years ago. 

With continued careful management of the public finances we will be in a position to continue to a sustainable level of investment across the economic cycle.

Corporation tax

A second key issue in advance of the Budget relates to corporation tax.  

As I have said previously, change is coming.  

The ongoing work at the OECD will result in further substantial alterations to the international tax architecture. 

The challenge before us is to build a global and robust tax architecture that works for all into the future. 

Make no mistake, whatever emerges from the discussions at OECD will be disruptive.  

These discussions are particularly difficult for small open, export orientated countries such as ours but we must engage and make our voice heard. 

An acknowledgement of the changing nature of where profits are generated in the modern economy could produce amendments to current international tax rules, which satisfies those countries who are calling for change.    

This is a logical development to account for the advent and adoption of digital technologies which are rendering traditional value chains and business models outdated. 

However, it is important that any move in this direction recognises a number of well-established principles.  

In particular, the existing transfer pricing rules must remain at the heart of the global tax framework.  

The significant value-creating activity that happens in exporting countries, like Ireland, must continue to be recognised and rewarded.  

And, further to these principles, the final outcome must not unfairly benefit larger countries at the expense of smaller ones.

Within these parameters I believe we can achieve a consensus on a long-term solution. 

I am a firm believer that all companies must pay their fair share of tax but any lasting solution to the digitalisation of the economy must not come at the expense of fair and legitimate tax competition. 

Competition is a driver of efficiency, and tax competition is particularly important for smaller economies.   

Competitiveness is not just a prerogative of large countries. 


Finally, it would be amiss of me not to mention Brexit and I do not need to spell out the risks inherent in Brexit to this audience. 

I am under no illusions as to the challenges that this will pose. 

We have been working hard to prepare for all scenarios. 

While we cannot be certain of the form Brexit will take or the effects, we are certain that the impacts for Ireland (and others) will present challenges. 

There will be a permanent loss of output. 

However, we are still well placed to prosper in an EU without the UK. 

Over the recent period, preparations for Brexit have escalated significantly. 

My Department has been at the forefront of this, with a wide range of publications focused on Brexit related issues. 

We have taken a number of measures to minimise disruption, while, at the same time, initiatives such as Future Jobs Ireland, the Ireland Connected Trade and Investment Strategy, the National Development Plan, as well as broader measures to balance the public finances, will help the economy. 

I am confident that we have the economic, business and political know-how to manage our way safely through Brexit. 

However, we should also not be under any illusions about the nature of the challenge. 

In particular, it now seems evident that the current British Government wants scope for regulatory divergence from the European Union, whether or not there is a deal. 

While the Irish Government respects the choice of the British Government to pursue a path of regulatory divergence from the EU, there are clear implications for this island, and the Good Friday Agreement, that cannot be ignored in the event that this policy is pursued. 

We must also recognise the reality that in our global era, where the separate regulatory superpowers of the US, the EU and China co-create global rules, this could be a very significant decision. 

As such, were the UK to pursue a policy of regulatory divergence from the EU, there are very profound implications for the protection of the Single Market on this island, which constitutes the UK’s sole land border with the EU. 

This reminds us, therefore, of the vital importance of the backstop and the importance of regulatory alignment on this island. 

In terms of my most immediate priorities, as you are aware, the Government decided on 11th September to approach this Budget on the basis of a disorderly Brexit. 

This is the most prudent and safest course of action.


In conclusion, I would like to thank IBEC for the opportunity to speak here this evening. 

As the Budget and Brexit draw nearer, I would like to conclude on a number of points. 

The economy is strong, with effective full employment conditions. 

A number of steps have been taken by this Government to boost resilience, through:

  • Balancing our books (for the first time in a decade);
  • Reducing our debt burden;
  • Scaling up capital investment.

We must ensure that the Irish economy remains agile enough to benefit from the opportunities and challenges ahead. 

In that regard, I continue to see the domestic enterprise sector, and SMEs in particular, as integral to our economic well-being. 

We will continue to support the business sector and our citizens to the best extent possible. 

I am conscious of the need to ensure that the right policies are in place to protect the hard-won gains in living standards achieved in recent years. 

Our economic model is built on an open, diverse and enterprising business environment, supported by a stable and competitive tax environment and a young, dynamic and highly educated workforce. 

A central tenet of this is our unwavering commitment to the Single Market – our openness to goods, services, labour and capital. 

I strongly believe that we will overcome any challenges we face. Recent history is testament to the resilience of our people, our business community and our economy. 

Going back to where we are this evening in this wonderful location. 

I can draw several parallels with my job as Minister and the showjumpers during the horse show last month.

The build-up is intense, the competition fierce, there is an expectant audience, and there will be hurdles, but I am confident that I can navigate a clear run. 

Thank you and I hope you enjoy the evening.